Existing Home Sales Dip 2.2% in May

In the first month after the deadline to sign a contract for the homebuyer tax credit, the annual rate of existing home sales declined 2.2%, according to the National Association of Realtors (NAR). The numbers reflect borrowers closing during the period leading up to the end of June, when the $8,000 tax credit on buying a first-time home expires. To qualify, potential homeowners needed to put in an offer on the house by the end of April.
Those transactions are measured in today's report from NAR. "We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings," said NAR chief economist Lawrence Yun.
NAR said gains in the West and South were offset by a decline in the Northeast, while the Midwest region was steady from the previous month.
The seasonally adjusted annual rate of existing home sales was 5.66m units in May, down 2.2% from the upwardly revised rate of 5.79m in April. The April rate was revised from a 7.6% increase to an 8% increase. However, May closings are 19.2% above the annual rate of 4.75m units in May 2009. NAR's existing home sales index measures completed sales transactions of single-family, townhomes, condominiums and co-ops. Nationally, all types of housing declined month-over-month.
The national median existing home price was $179,600 in May, up 2.7% from May 2009, NAR said. Distressed homes accounted for 31% of sales in May, compared to 33% in the previous month and in May 2009.
In the single-family home sector, sales declined 1.6% to a seasonally adjusted annual rate of 4.98m in May from a pace of 5.06m in April. Single-family sales are up 17.5% from a year ago. The median existing single-family home price was $179,400 in May, 2.7% above a year ago.
Prices were higher year-over-year in 16 of 20 major metropolitan statistical areas (MSAs) NAR tracks and sales of existing single-family homes were up in 18 of 20 markets compared to May 2009.
Existing condo and co-op sales were at a seasonally adjusted annual rate of 680,000 in May, down 6.8% from the April rate of 730,000. Condo and co-op sales are up 32.6% from the rate of 513,000 in May 2009. The median existing condo price was $181,300 in May, up 3.4% from a year ago.
Regionally, the drop in existing sales of all property types in the Northeast pulled down the national rate. The annual rate of 890,000 in May was down 18.3% from April, but up 12.7% from a year ago. The median price in the Northeast was $240,200, down 2.2% from May 2009.
The West experienced the largest increase in existing sales. The annual rate of 1.29m is up 4.9% from April and up 15.2% from a year ago. The median price in the West was $221,300, up 7.4% from a year ago.
The South was also up slightly. Existing sales were at an annual rate of 2.15m in May, up 0.5% from April and up 22.9% above a year ago. The median price in the South was $159,000, up 1% from May 2009.
The Midwest was even from a month ago. The annual rate of 1.33m is up 22% from a year ago and the median price was $150,700, up 2.2% from a year ago.
NAR president Vicki Cox Golder said that while distressed sales at roughly the same level as a year ago, the gain in home prices is a sign that the market is in a good position to stand on its own without further government stimulus.
"Very affordable mortgage interest rates and stabilizing home prices are encouraging home buyers who were on the sidelines during most of the boom and bust cycle," Golder said, citing Freddie Mac data that showed the national average rate for a 30-year fixed-rate mortgage was 4.89% in May, down from 5.1% in April.
A separate survey of NAR members reported first-time homebuyers accounted for 46% of home sales in May, down from 49% in April. Investors accounted for 14% of transactions, down from 15% in April. The remaining sales were to repeat buyers. All-cash sales accounted for 25% of transactions, down from 26% in April.
The total supply of housing was 3.89m at the end of May, down 3.4% from April. That's an 8.3-month supply of housing at the current sales pace, down from an 8.4-month supply in April.
Write toAustin Kilgore.

This month inHousingWire magazine

The appraisal industry is in the midst of huge disruption as automated valuation models and hybrid appraisal products gain favor with regulators and investors. What does the future hold for appraisers and appraisal companies as they adjust to the new realities of automation?

Feature

As Millennials grapple with paying off student loans, their opportunity to buy a home gets pushed further and further into the future. That delay has consequences far beyond individual students — the growing student debt crisis impacts every part of the economy.

Commentary

There has been a conscious and rapid shift to broaden the use of alternative valuation products for origination. Not every decision needs a $500, full-blown 1004 interior appraisal. And in some markets where appraisers are short in number, the turn times can stretch from days to weeks. What these new alternative — some would say disruptive — valuation products do is enable lenders and servicers to better match the product to the risk by harnessing big data and technology.